IBKR Safety of Funds

[ktm]

We truly live in an era of fake news, spin and distortion.

IB was right to take the steps they have taken.

The IB CEO is correct in his assessment of the risks posed to brokerages by this unprecedented retail pump, largely based on lies and distortions (with dump to soon follow).

There is no grand conspiracy - it is simple risk management.

A voice of reason in a sea of furious hand wringing.

 

[stochastix]

IB has no right to ban anybody from trading, period. It has the right to raise margin requirements to raise the cost of trade, yes but it doesn't have the right to ban trading or anybody. This is not them exercising duty of care. This is them violating client agreement and committing breach of contracts. In the client agreement we all signed when we opened the account, IB agreed to execute our orders when we send them in the best of their abilities and in return we pay them a commission. This is what they are supposed to do. They don't have the right to refuse.

Where were they when I was losing? What was their duty of care then? Did they ban the MM from trading when I was losing? So they only ban us from trading when we are winning? F*** them!! F*** IB!!

you will fail because you have failed to
divest emotions from trading

 

[Dicer]

Think of it as a margin call on the brokerage firm, not the individuals. The clearing requirements for Robinhood brokerage for settling up the last two days of customer trades depend on the net stock trades and the stock volatility, so you can see how if your customers buy a ton of GME, your normal brokerage capital won’t be enough.

also, IB has tons of extra capital. They’re just being cautious and annoying.

Logically, yes. In fact, zero risk doesn’t exist I think.

If the client borrows money to short sell the underlying stock which is extremely lack of market liquidity and IB suddenly increases margin requirement, the client must be forced to liquidate his positions. And his large aggressive market orders may even worsen the market situation. When all positions are liquidated, his NLV can go negative. IB still needs to pay with IB money.

I am just worried of this kind of probability. If the underlying is SPY or S&P500 option, this situation must not happen. But for GME, I am worrying.

 

[graph-trader]

I guess the Jay Gould syndicate part went over your head. This is stuff straight out of Fifty Years in Wall Street by Henry Clews. It is cut dry market manipulation by a syndicate. That is it.
Anyone defending this is just nice for me to block because I don't care what you think about anything else.

but try to think about it.

The reason why this happens is that short-sellers have too many short positions. They forget about the risk.

Most of the quant firms only buy 1-10% ADV (10% should be the max), but they short sell the entire firm.

 

[Pricechange]

Did you even watch the video? TP explicitly states that IB is solid with 9bn of risk capital backing its obligations to customers and clearing houses plus automated risk control systems.

I don't agree that it's IB's responsibility to protect the integrity of markets and shut down all trading but his point about the systemic risk that brokers (and clearing firms) without big balance sheets pose to the clearing houses is spot on. Where do the 15bn of losses from short GME options sit? Can the customers all make good? Decent chance that some smaller firms that clear with the likes of Apex, Pershing, Wedbush suffer losses from unrecoverable margin debt and there's not much cushion along some of these chains.

They should go bankrupt..but they are the only game in town for what they offer. I used to like SinkorSwim until they were bought by Ameritrade.

 

[Dicer]

They would’ve already closed such positions as soon as there was margin risk. IB doesn’t have any problems instantly buying back shares for someone who shorted them. They even increased margin requirements to make sure that IB itself is protected.
They also restricted trading in those stocks to protect themselves and therefore the customers, so there is zero risk for IB.
That’s also the reason they’re bringing attention to the issue, explaining that volatile instruments are risky, while IB is always proactive and obsessed with managing risk.

And btw, they do have a right to halt trading in securities since IB customers agree to this when opening an account.
This also affects me negatively, but there are too many benefits of staying with IB, including their risk management.
Though I may open an additional account with a different broker in the future, just to have more choices at times like this.

IB Risk management: forgot to support negative oil price. To be honest, after negative oil price event, I realize IB risk management does not fulfil my expectation.

but yes, I am still using IB because it is the only broker which offers advisor account and allows users to trade different markets.

 

[themickey]

IB Risk management: forgot to support negative oil price. To be honest, after negative oil price event, I realize IB risk management does not fulfil my expectation.

but yes, I am still using IB because it is the only broker which offers advisor account and allows users to trade different markets.

That's like saying "China is a threat to my way of life but I have to trade with China".

One day it will bite you in the ass.

 

[lpope]

Let's see what the weekend brings. The more I think about it, the more I get a sense that Robinhood could have been put into a questionable equity position at the Wednesday open due to the massive GME gap up and insufficient margin requirements on short GME calls leading to negative customer equity. Robinhood CEO was quoted everywhere as saying no liquidity issues but the more important question is if there is a solvency problem, which the capital raise and cross the street panic buy button removal suggest might have been the case.

I gripe about IB from time to time but everyone should keep in mind that TP is good people. He tries to do the right thing and I can't say that about anyone else in the industry (Jack Bogle RIP). Love that TP tilts at windmills about selling order flow, prices margin fairly, took money out of his own pocket to cover losses to insider trading so IBKR IPO buyers were made whole, took the hit on negative oil prices when systems didn't manage risk properly, etc...

 

[caroy]

https://www.cnbc.com/video/2021/01/...an-worried-about-integrity-of-the-market.html

I don't trade through IB but I have respect for them and specifically their founder. He came to this country with nothing and has built a market leading firm. I was impressed with their integrity in making customers whole during the whole negative crude oil fiasco when they had their platform programmed incorrectly and did not relay accurate prices. IB made people whole for their error. Nobody likes changing the rules mid game but it's in the disclosure documents and is a part of life. Everyone likes seeing hedge funds lose to the retail "retards" but coordinating a social media attack and a run on known shorts is in my book the same as a shady broker pumping and dumping penny stocks. I'm curious as to the what rules and regulations all this brings coming forward. I work on a college campus and yesterday the talk of everyone in class was going long some bullshit crypto called dogie coin. They were all showing me their apps and letting me know I'm missing out on the next big thing. These kids all want to hop on the ride. At least they are talking about the markets. Bubbles burst. I have a whole basement full to tulip bulbs I'm trying to sell but the futures market for them seems to have lost its liquidity.

 

[ZBZB]

took money out of his own pocket to cover losses to insider trading so IBKR IPO buyers were made whole

What happened?